Where are We Headed?

I posed the question to financial planners if the market we are now in, is similar to 1999 or 2008?

Most stated that this is a different type of market.  The market is supported by a strong economy, strong stock market, relatively low rates and of course a strong real estate market.  One response from my good friend, Dave Murdock with Bordeaux Advisors in Menlo Park:


We see the economic backdrop as positive, particularly in the United States.  CEO confidence is a two decade high and bank lending officer surveys for business loans, shows banks are more accommodating.  Tax reform continues to pay dividends and unemployment is low.  This conveys consumer confidence is high, and interest rates and inflation remain relatively low.  Lastly, equity prices are a function of corporate profits and US profits and free cash flow margins are at the highest level since 1952.

Money in the US

Money is being repatriated and capital spending will likely increase in the short run and valuations are not excessive.  Our recommendation to clients is stay invested in risk assets where appropriate.  All told, this environment remains in a position to be supportive of equity prices in the US. International markets.  It will likely tag along, particularly given their valuations are below those here locally, and attractive assets will usually get a bid from investors at some point.


Finally, we do not believe a recession is likely in the next 18 months, though the global central banks are intent to tighten monetary policy and increase interest rates. This tips the risk/reward balance for fixed income to unfavorable and we recommend taking a defensive position in bonds.  Given this late cycle characteristic at hand, we suggest that diversification of portfolios should include alternative asset classes.  This should help minimize volatility and could prove quite valuable if geopolitical risks continue.

In Closing

We specialize in Residential, Commercial and Reverse Mortgage financing.  There are still many advantages of buying and also pulling cash-out of your current home to diversify investments.  Last week I met with a retired client that wanted to pull equity out of his house to invest into market, a way of diversifying equity so he wasn’t house rich, cash poor.  After running multiple scenarios he and his financial planner & tax planner felt it prudent to pull money out of equity, invest those assets so he could diversify his portfolio.  What even neater, we did it with a Reverse Mortgage that results in no monthly mortgage payment vs a conventional loan that has payments and cash flow challenges.

Any questions on the above, please contact us.

Best Regards,

Rob McCarthy

Senior Mortgage Advisor


408-377-4123 o  650-465-8957 c   408-608-1921 f

101 Loan – 1601 S De Anza Blvd, Suite 260, Cupertino, CA 95014

CA DRE #01165697  NMLS #121019


  1. Residential Financing for Purchases and Refinances on 1 to 4 unit properties.
  2. Reverse Mortgage Financing to include Conforming and Jumbo.
  3. Commercial & SBA Financing to include Multifamily, Office, Retail and Light Industrial.
  4. Most 1st Time Buyer Programs including FHA, VA and USDA programs.